J.P. Morgan Earnings: Analysts React

Oct 13, 2010 9:22 am ET

J.P. Morgan Chase’s third-quarter profit rose 23% but revenue and loan balances continue to show that the nation’s banks haven’t found firm footing. The bank also said it found errors in the way its mortgage division handled foreclosure affidavits. Here’s how the analysts are reading the results.

Mike Mayo, CLSA — Net-net: results reflect our theme that revenues in the industry are likely to remain weak for some time, though JP Morgan has an advantage with higher capital ratios that should cause it to be among the first to increase its dividend next year.

Guy Moszkowski, BofA Merrill — Rather than letting the as-expected $0.22 Cards reserve release come to EPS, it chose to add reserves for litigation (including for Mortgage matters) and for Mortgage repurchase. Overall, results indicated the company continues to produce solid underlying results from its diversified franchise, allowing it to cope with the continuing fallout of the mortgage meltdown while still producing an acceptable level of earnings.

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